Buying or Selling a Home/1031 Exchange

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Expert: John Hendricks - 3/19/2008


Question
I have a s.f. home in California that the current tenants would like to buy.  I would like to sell it to them and then buy a multi-family from my dad (doing a 1031 exchange)
Because the market has softened, he would be selling me his complex at a loss from when he bought it a few years ago. Is this possible?  Also, my equity is about 300k.  Does the new property purchased need to be at least that or does it need to be based on the selling price of $650K to qualify for the 1031 exchange.
Thanks!

Answer
Dear Ginny;

Thank you for your good question...

I am not a tax consultant but am familiar with 1031 exchanges. I believe that your father will have a tax write off if he takes a loss on an income property. He should really check with his accountant to determine whether that is true or not.

As far as your situation, it is not the equity that is used as a basis for the replacement property, it is the sales price has to be the same or greater. I am a Realtor in Marin County and use a local exchange accommodation agent who would be glad to talk with you regarding this whole situation. There is no cost for this consultation, but if you are satisfied with his service, please use him if it becomes necessary during your exchange. He is noted as one of the best in exchanges in the bay area. The companies name SF Bay Exchange, Brandt Nicholson, 415-332-9116. Please say hello for me when you call.

I do highly recommend you contact either an accountant, and/or Brandt for the professional information you need to have before making this decision.

If you need a Realtor to help you along the way though, don't hesitate to call me. My partner Meryl Dean is a member of the local MLS in San Francisco, as well as lives there. Thanks again for your question, and I hope to hear from you if I could be of further assistance to you.

Warmest Regards;
John Hendricks
415-259-4518
JohnHendricks@Marin1.com

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John Hendricks

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As a California Realtor for 23 years practicing in Marin and Sonoma Counties, it is now time to provide counsel through AllExperts.com to those who need advise in real estate. My knowledge and experience includes a wide range of resale residential real estate purchases, new home sales, income related investment properties involved in 1031 exchanges, and land. Let me help you in any of these areas...

Experience

John Hendricks has established himself as one of Marin & Sonoma Counties premier Realtors. A native Californian, John is a well-known and respected Realtor in both Marin & Sonoma Counties who has resided in the Northbay since 1976. John began his real estate career in 1986, and since then has distinguished himself as one or Northern California's top producing Realtors. Before joining Frank Howard Allen Realtors, John was an associate of the Prudential California Realty from 1990-1992 where his outstanding sales achievements earned him one of the company's highest honors, the prestigious "President's Circle Membership", presented to the top 2% of associates for sales and earning excellence. Since his association with the highly regarded Frank Howard Allen Realtors in 1992, John has once again established himself as one of his company's Top 10 Producing Realtors in Marin & Sonoma Counties for the years 1993 through 2007 and now in 2008. Five continuous years of outstanding performance has now allowed John to join 15 other Realtors in the prestigious "Lifetime Hall of Fame" for Frank Howard Allen Realtors. John established a group of professional individuals who specialize in a variety of areas in real estate called, 'Lundmark-Hendricks Fine Homes' This group of professionals are dedicated to the success of representing clients with the greatest amount of care and service when either buying or selling real estate.

Organizations
California Association of Realtors National Association of Realtors

Education/Credentials
Upon Request...

Awards and Honors
Frank Howard Allen Realtors "Hall of Fame Member" Chairman's Circle for 10 consecutive years

Past/Present Clients
Joe Louis & Sharon Sigurdson We want to thank you again for your excellent representation of interests during the recent purchase of our home in Petaluma as well as the sell of our home in Mill Valley. We had the unusual pleasure of working with you during the last year both as sellers and buyers. We felt that our interests were always paramount and that we received a very fair price for the sale of the Mill Valley house as well as our purchase of our new home. This speaks particularly well of you, because of the recent unstable and chaotic real estate market. Will Finke "Quite frankly, we came out of a very difficult situation, which time does not allow elaborating on. This was one of the greatest experiences of our lives as clients. John Hendricks is one of the top businessmen I have ever met." Bruce & Nancy Rosentreter "I chose John Hendricks to sell my house. I picked him because I thought he was professional, aggressive, and that he could get top dollar for my house. He fulfilled my expectations completely." Joy Schuelke "Since we were trying to sell a high end home in a very tough market, and in the middle of a very rainy winter, the prospects seemed quite bleak. I was convinced at the time, and am even more so now, that without John's tenure, patience, and tenacity, we would have not been able to move the property." Lynn McCarthy "I cannot stress strongly enough how impressed I was with the service provided to me by John and his group. Throughout the entire transaction, John was always available, always forthcoming with excellent advice based on his years of experience, and always willing to put in the extra effort to make this a positive experience for me. I feel lucky to have had the experience of working with him." Lea Lieurance-Turk "Thank you John for your outstanding real estate services for the past 5 years I have known you. You have made my dreams come true as far as selling and buying property."
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